The NASDAQ 100 pulled back just a bit during the trading session on Monday, but it looks as if the 50-Day EMA is going to continue to hold, at least in the short term. The question now is whether or not the 15,000 level holds as well, which is basically around the same level. This is a situation that continues to see a lot of volatility, but I do think that a lot of traders are going to continue to flood into the NASDAQ 100, because there are just a handful of stocks that continue to move everything.
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It’s worth noting that on Monday, there may have been a little access volatility due to the fact that the NASDAQ 100 was being rebalanced, as the usual suspects have become more than 48% of the concentration of the index. That has distorted the market; therefore, I think it’s probably going to be a day or 2 of volatility in general. The longer-term attitude is still very positive, as traders continue to look the largest technology companies for a bit of safety. However, between the realignment of the index and of course the fact that we had gotten a little bit overstretched makes sense that we would have to pull back in order to define enough value to start going higher again.
- The 15,250 level is a target that I think people are trying to reach, but if we can break above there is likely that the market could go looking to the 15,500 level.
- Underneath, if we break down below the 50-Day EMA is possible that we could go down to the 14,600 level, an area that previously had been very supported.
- The market continues to be more noise than anything else, so I do think that it is likely that we will eventually try to go higher.
- You should also be cautious about the position sizing, as the market has seen so much in the way of noise.
Longer-term, it looks as if the are still very much in the way of a bullish market, but if things suddenly change, you will need to have an idea as to where the market changes, perhaps somewhere near the 14,000 level. Until then, I don’t necessarily think that the NASDAQ 100 is something you can be shorting.
Potential signal:
Looking forward, the market seems to be playing off of the 50-Day EMA, so it’s possible that we may bounce from here to attempt a move above the 15,250 level. If we can break above the 15,250 level, I would begin to add to a core position. Stop losses at this point will be centered on the 14,900 level, with a potential “reset” near the 14,600 level.
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